You know the narrative — healthcare is expensive. Healthcare spending is up year-over-year (3.9%), with costs rising faster than the annual rate of inflation. This, combined with the rise of high deductible health plans (HDHPs), puts pressure on the average American consumer to spend more of their savings on everyday health expenses.

What this conversation is missing is what and where Americans are spending this money. Are expenses dominated by high-cost medical events, like hospital stays? Or is it the combined effect of higher co-pays and out-of-pocket costs for health services and prescriptions?

Lively sampled HSA spend data from thousands of random, unique customers to better understand consumer habits when it comes to healthcare spending. This HSA Spend Report will outline where consumers spend their HSA funds and compare that against data from the Center for Medicare and Medicaid Services to understand the similarities and differences between HSA spending and national healthcare spending.

2018 HSA Spend Report

Report Details: Lively collected anonymous data from a randomly selected subset of users (15,000), who had an HSA account in 2018. This includes accounts with active contributions and ones without. To classify the types of health goods or services that were provided, HSA debit card spend data from January to December 2018 was categorized with Merchant Category Codes (MCCs). No demographic or personal information was provided or used to create these cohorts. As such, any demographic details are based on post-data collection analysis.

Key Findings

HSA funds are primarily being used to pay for rising household healthcare expenses.

Personal household out-of-pocket healthcare expenses continue to increase and outpace inflation, causing these costs to grow each year as a percentage share of personal household expenses (37%).

Short-term costs limit long-term benefits.

While HSAs have clear short and long-term tax advantages, rising healthcare costs are forcing HSA account holders to use more of their funds for expected expenses each year, rather than saving and investing them for later use.

Where did the money go?

Physician and clinical services were the primary use of HSA funds in 2018 (41 percent), followed by prescription drugs (25 percent), then hospital expenses (7 percent).